Shredding and pulverizing records to prevent ID theft
|By Tim Pennington Enquirer contributor|
|6/30/2005 – What do a hammer, a paper shredder and a $250,000 truck that can pulverize paper and metal have in common?
They are just a few of the ways the Federal Trade Commission will allow businesses to comply with its new rules for disposing of consumers’ personal information as part of the Fair and Accurate Credit Transactions Act. The 2003 law is one of several moves by Congress to protect businesses and consumers from fraud and identity theft.
Starting June 1, businesses had to begin adhering to new FTC rules on destroying consumer records such as credit reports and financial data or face civil penalties.
The idea is to prevent “Dumpster diving” – in which criminals look through trash and discarded business files to obtain personal information on customers.
“When fully implemented, these provisions should help to reduce the incidence of identity theft,” said Howard Beales, director of the FTC’s Bureau of Consumer Protection.
The rules apply to both large and small organizations that use consumer credit reports in business transactions. Among those who must comply are banks, car dealers, employers, landlords and debt collectors.
While a paper shredder purchased at a local office supply store may do the trick, the FTC is allowing some companies who store data on computer disks to simply smash magnetic material or “pulverize it.”
Other businesses, though, are turning to professional data management and document destruction firms.
“It’s been absolutely incredible, because we weren’t even here 10 months ago – and now we have 165 customers and a couple hundred thousand dollars in business,” said Mike Callihan, owner of Document Destruction on Reading Road in Paddock Hills.
He started his paper shredding company as a division of another firm he owns, which sells business forms.
“My print customers were coming to me to help them with disposing of their documents, so I bought a big truck and started shredding,” he said.
“These last few months have been crazy, but there is a need to be filled with these documents,” Callihan said.
Larry Gray, chief operating officer for Business Information Solutions on Spring Grove Avenue in Queensgate, said his document destruction business has increased in recent years, although he would not disclose financial figures.
“Our industry is being propelled by FACTA, the Sarbanes-Oxley Act and a lot of other new rules,” Gray said. “There is certainly more heightened awareness of disposing of business documents than in the past, and the new rules have a role in that.”
Cintas, a leader in the uniform apparel industry for several decades, entered the document destruction field three years ago and has seen sales grow to more than $40 million a year.
“The industry was growing before FACTA came in, but we’ve seen more activity now that these new rules are being put into place,” said Todd Schneider, vice president of Cintas’ document management division.
130 million pounds a year
Cintas studied the document-destruction industry for a year before it began buying smaller operations around the country to combine with its existing uniform rental and safety equipment operations.
Shredding about 130 million pounds a year, Cintas is in 57 of the largest 150 U.S. markets and expects growth of about 30 percent annually, said Pam Lowe, corporate communications director for the Mason-based company.
“Our margins in document destruction are about the same as uniforms, so it is doing very well for us,” she said. “It’s a $3.6 billion industry right now in the U.S., but we think it will grow to as much as $8 billion very soon.”
Schneider said the key to Cintas’ growth has been cross-selling with its uniform and safety sales people, as well as the company’s ability to purchase trucks with high-end shredders and other destruction equipment that can handle computer hard drives, CD-ROMs and other non-paper items that store consumer data.
Cintas and other firms charge about $60 a visit. The Cintas trucks can destroy 4,000 pounds of paper per hour.
“These trucks cost $250,000 each, and they can handle just about anything that needs to be destroyed,” Schneider said. “We show up at the business, haul the documents in a locked container out to the truck and destroy it right on site. It doesn’t get easier than that.” Paper is shredded, the other items ripped to shreds. The end product is sent for recycling.
‘Right in front of our eyes’
Dave Neiheisel, president of Joseph Automotive Group, one of the largest car dealerships in Greater Cincinnati, agrees.
“It can be a pain in the neck if you have to destroy this stuff yourselves,” said Neiheisel, who switched to Cintas last year after having documents destroyed in-house for years before the law was passed.
In the past, Neiheisel’s employees have safeguarded customer credit reports – which the dealership needs only until financing is arranged – being sure not to leave them sitting on a desk and even locking them up at night.
Now Neiheisel’s staff puts customers’ information in locked storage bins supplied by Cintas, which comes by three times a month to destroy the paperwork. The lock box cuts down the hassle factor and is relatively inexpensive, Neiheisel said.
“The best thing for us is that we see them shred it right there in front of our eyes,” he said. “I don’t want somebody taking it and saying they will shred it and it ends up in a landfill somewhere. Customers would never forgive me.”
Charles Tassell, governmental affairs director for the Greater Cincinnati Northern Kentucky Apartment Association, said his members have been destroying documents well before the new rules went into effect.
“This is a small change for us because our members have always practiced a great deal of care with personal information they get from consumers,” he said. “A lot of our members are small enough just to buy their own shredders, so they’ve been getting rid of the information on a timely basis for some time.”
Schneider said Cintas employees would assess for clients what needs to be destroyed.
“A lot of what the new rules are about is educating the client on what needs to be destroyed to be in compliance,” he said. “The big firms know how . . . It’s the small and medium-sized companies that we hope to help.”